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Why NRG Energy, Tailored Brands, and Williams-Sonoma Slumped Today

These stocks fell much further than the overall market. Find out why.

The stock market gave up a small amount of ground on Thursday, breaking a three-day streak of advances for the Dow Jones Industrials that had briefly taken the average above 18,000. Some investors pointed to negative comments from billionaire George Soros warning of tough times ahead for stocks, especially in light of comments that suggested he sold off equity positions in favor of buying gold and gold-mining stocks.

Many share Soros' skepticism about the growth that the Chinese stock market has experienced during the past decade; but even so, losses among major U.S. indexes were relatively small. Nevertheless, some stocks fell much more than the overall market, and NRG Energy (NYSE:NRG), Tailored Brands (NYSE:TLRD), and Williams-Sonoma (NYSE:WSM) were among the largest decliners on the day.

NRG Energy fell 7% after the company received a substantial downgrade from a stock-analyst company. Analysts at UBS argued that the utility's recent bounce, spurred by optimism about prospects for natural gas, fails to take into account the potential risk involved in pricing for power.

Prices for wholesale electrical-generation capacity have been relatively weak in auctions by industry leader PJM, and further deterioration could cause substantial problems affecting a big part of NRG Energy's overall business. Unless electricity prices start matching recent gains in natural gas, the recent rise for NRG stock could reverse itself in the near future.

Tailored Brands plunged more than 20% in the wake of its fiscal first-quarter results released late Wednesday afternoon. The company, which owns both Men's Wearhouse and Jos. A Bank, reported extremely weak performance for its key businesses, including a 3.5% drop in comparable-store sales for Men's Wearhouse, and a whopping 16% decline in comps for Jos. A Bank.

CEO Doug Ewert tried to make the case that the company is still making progress on its transition plan to implement cost reductions, realign its organization, and come up with a more-rational size for its store networks. Yet investors are growing impatient with the pace of Tailored Brands' turnaround, and they will want to see more encouraging signs of potential growth before they're likely to bid share prices back upward.

Finally, Williams-Sonoma fell almost 6%. The retailer didn't release any news of its own, but the stock likely fell in sympathy with high-end home furnishings peer Restoration Hardware, which saw its share price plummet 21% today. Williams-Sonoma hasn't taken anywhere close to the hit that Restoration Hardware investors have seen, but both companies have fallen prey to the perception that retailers focusing on upscale clients are having trouble attracting business

in the current economic environment. Shareholders need reassurance that Williams-Sonoma won't suffer the same fate as its competitor. Until they get it, the stock could remain under pressure.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of NRG Energy, Inc.. The Motley Fool recommends Williams-Sonoma. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Author

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.
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